TOP 5 Pitfalls in Land-Based Gaming…or How to Survive in a Hostile Environment
In previous issues, I wrote about tips and tricks for successfully operating a gaming hall. We are in a competitive market where the services offered by operators, as well as player behavior, are constantly changing, and operators’ activities in gaming halls are continually adjusted to market dynamics and legislative and tax changes.
by Irina Iagăru, management consultant
The industry faces a series of obstacles that sometimes hinder the smooth running of the business. The tax measures imposed by the authorities
Irina Iagăru, management consultant
over the past year have forced operators to adjust their development plans, turning them into cost-cutting plans.
This is a time for resilience, with “survival mode” activated.
Thus, to outline in a few points the pitfalls that can arise when operating a gaming hall during difficult times, I will highlight some of them, as well as offer a few tips and tricks on how to avoid them:
- Tax Increases—What Do We Do When Everything Gets More Expensive?
Tax increases, one of the major challenges facing the gambling industry, combined with other legislative measures, are making it harder for gambling operators to carry out their development plans. As the saying goes, “Where there’s a law, there’s no room for negotiation.” Likewise, in the gambling industry, operators have been forced to adapt and recalibrate their businesses to the new taxes and measures.
What do we do next? How do we manage our budgets? How do we optimize? How do we manage cash flow? How do we keep the P&L under control?
What do we do with the KPIs? What does the future hold?
What is the competition doing? What is the market feeling?
As converging points of these questions, we also have their effects:
– Halting territorial development plans for new locations
– Optimizing expenses
– Optimizing existing locations
– Freezing the creation of new jobs
– Reducing the number of employees or reassigning them to retraining programs, as a result of closing unprofitable locations
– Reducing marketing campaigns or even halting them entirely.
Tips & tricks:
When everything around you becomes unstable, there are still a few points of stability:
– Make sure you have sound, business-oriented management—in other words, make sure you’re surrounded by the right people—it’s essential for survival!
– Now is the time for foresight rather than vision, so make sure the plans you make are carried out swiftly and transparently, but above all as outlined by senior management.
– Restructuring means a more in-depth analysis of the business, not necessarily its closure, so be sure it is done with profitability and risk factors in mind.
– Reducing the number of employees—a painful process every time—becomes an objective measure for preserving and continuing operations.
Common solutions include severance packages or support for career transition, where the employer has a dedicated platform.
– When times get tough, actions make the difference. So how do we weather the storm?
Simply put:
- We connect with our environment—in other words, we’re more grounded in the market, we go out of our way to meet customers where they are, we reach out to them, and we show them that we’re there, that we see them, and that we care! You’ll see, it will build loyalty.
- We stay in touch with reality—in other words, we look beyond the CCTV cameras installed in the halls. We see our employees’ presence and needs more clearly. You’ll see, it will strengthen the organizational culture.
- When you can no longer offer financial perks, offer your presence—in other words, when cash is tight, a simple “meal with friends” carries more weight.
Metaphorical or not, in the halls this is felt through a real, sincere customer experience. People feel it, people come back.
- It’s a good time for micromanagement—in other words, it’s the moment when you have time to work closely on developing skills and helping team members acquire new ones.
Personalized action plans, MOA (Activity Organization Matrix) development—all are welcome during this period.
- Last but not least, cost analysis, activity calibration, market presence, and staffing are not merely tools designed to lighten the load during difficult times, but essential aspects of business, regardless of the circumstances.
- The Workforce—Who Stays, Who Leaves?
The gambling industry requires a skilled workforce to operate, and the nature of the jobs offers equal opportunities and compensation based on job descriptions and individual performance, a factor that has made it particularly attractive to young people. A downturn in this industry has led to a lack of employment opportunities, as it is considered an important part of the local labor market in many areas.
What do we do when the crisis knocks on our door? Who stays to work when incomes fall and uncertainties rise?
Tips & tricks:
- Employee evaluations are the first step in a series of actions, providing a clear and concise analysis of responsibilities, objectives, achievements, strengths, and weaknesses.
- When an employee’s income has two components (fixed and variable), and the variable component is subject to changes caused by the economic situation, well, this is a turning point, as the employee has two options: to stay or to leave.
For employees without notable achievements, the choice is simple; most often, they choose to leave the organization on their own accord.
For high-performing employees, this drop in income must be offset by other benefits, most often in the form of professional development (advanced training courses, placement in a new department, etc.), ensuring both the employee’s continued employment and the benefit to the employer.
- As an entertainment and hospitality industry, the sector means that the income of a segment of employees also includes a component of compensation for services, also known as tips.
Land-Based Gaming
- Optimizing branch operations—how do we do this?
Optimizing branch operations involves streamlining their entire workflow.
It starts with:
- Business pivoting—a rotating overview of the operations in the halls
- The local economic situation – aligning with legislative changes, analyzing potential declines in household income, competitor movements, shifts in player habits, etc.
- Monitoring operational revenue/expenses
- Staff – cost vs. value per capita
- Marketing campaign management – ROI (Return on Investment) analysis, as these are a key driver of revenue but also a significant source of expenses.
In a positive scenario, optimizing these processes entails a series of measures that have a major impact on the business, employees, and customers, but ensure business continuity.
However, there is also a negative scenario.
As an entertainment industry, the major impact leads to the risk that players’ interests will shift toward the comfort and earnings associated with online platforms, but not always on licensed sites. To put it more accurately, when a player chooses to access an unlicensed site, they run the risk of having no legal or financial protection.
The closure (forced shutdown) of unprofitable locations results in the vacating of leased spaces, a reduction in the number of employees (reassignment or unemployment), a decrease in taxes and fees resulting from economic activity and paid to the state/local budget—in other words, a decline in income for the working population.
Scenarios, business plans, KPIs, P&Ls—all become critical factors in the decisions a manager or owner must make to keep the business running.
And yes, they’re all tough, but necessary.
- Cutting back on marketing campaigns—or who has money to throw around anymore?
When a crisis strikes, one of the first departments to be affected is Marketing: promotional spending is cut substantially, or even halted entirely, as a measure to preserve the company’s reserves and ensure its survival.
In business terms, survival means managing cash flow so that it follows a positive and predictable trend and ensures the liquidity needed to cover current expenses (salaries, suppliers, taxes, etc.).
What do we do next? Do we keep promoting? Do we celebrate the business’s anniversary? Do we offer promotions? Do we throw parties?
Yes and no.
Whether we’re managing a family budget or responsible for a company’s P&L, we’re looking at pretty much the same thing: how much do we earn and what do we spend?
Tips & tricks for effective management, if you answered YES:
- We reduce costs instead of cutting campaigns.
Reduction = smaller but consistent rewards
Benefits = customer loyalty
Top secret = the customer understands that even though times aren’t the best, the fact that these small rewards exist will carry a lot of weight and create additional satisfaction.
- We maintain the protocol, but modify the product offering
Protocol = necessary
Product offering = adapted to the new costs
Top secret = the customer still feels valued, which creates additional satisfaction.
- We keep the parties, but change the theme and frequency
Romanians always appreciate a reason to celebrate, especially since these events are a great opportunity for socializing, meeting friends, and celebrating; therefore, by keeping the parties but changing the theme and frequency, we prioritize satisfaction over mere contentment.
Parties = anniversary, themed
Top secret = the client will perceive the party’s theme as something the company has designed exclusively for their personal satisfaction, which builds trust in the business.
To conclude this chapter, in difficult times, we must not forget who we are addressing, what the nature of the business is, who takes precedence, and what directions we want to follow.
Just as we enjoyed the above in good times, so too, in challenging times, it is important to keep them in mind.
- KPIs—or how do we set performance indicators?
Key performance indicators, or KPIs, are the metrics that every company must establish and communicate to its employees, not only to measure the performance of a business, but also that of a team or an individual and their success.
What does performance mean? Is it synonymous with success?
No, although they are similar in concept. Rather, it determines it.
Performance has a monetary component. It is something that generates material benefits resulting from its achievement.
Success can be (only) in terms of emotional well-being, without having a clearly defined material form.
There is an intertwining of the two, with performance being the catalyst for success, but their value differs.
Why do we need KPIs? Simple: to combine the two aspects—quantitative and qualitative (what we achieve and how we achieve it).
Tips & tricks for performance and success:
- Organizational culture—strong, based on employee engagement, innovation, and results
- Transformational leadership—essential for long-term success
- KPIs—mandatory, not optional: quantifiable, relevant, purposeful, and measurable
- Effort and responsibility—a balance between teamwork and autonomy and personal accountability
- Reward for work
Performance is the force that accelerates success!
That is why it is important to carefully choose the people we set out on this journey with, whether we are talking about life partners or business partners.
I will conclude with a saying, which I leave to the audience to judge for themselves: “Choose a partner you can go to war with, not one you can wage war against!”
And now, it is time for war…
